The president of the European Central Bank has singled out credit rating agencies for criticism over the current turmoil on global financial markets.

In an interview with the BBC, Jean-Claude Trichet also insisted there was no reason to doubt the underlying health of the European economy.

He was in Brussels to explain to members of the European Parliament what had forced the Bank to lend billions of euros to financial institutions.

The credit crunch was prompted by fears that banks worldwide had lost billions of dollars on investments linked to risky home loans in the US.

Mr Trichet's arrival in the European Parliament's committee room was marked by a media scrum of flashbulbs and TV news cameras more usually associated with film stars.

He is, after all, the man who ultimately controls the destiny of the only currency that can truly claim to rival the US dollar.

No R word

His decision to pump billions of euros into Europe's money markets in recent weeks may have helped prevent the world from suffering a financial meltdown.

But he clearly believes the economic situation is very different in Europe from that on the other side of the Atlantic.

The word recession is not appropriate at all for us

Jean-Claude Trichet

While the former Federal Reserve chairman Alan Greenspan has warned of a real risk of a recession in the US, Mr Trichet says Europe's economy is fundamentally sound.

"Nobody has spoken of a recession in Europe, to my knowledge. I want to be cautious and its true that uncertainties exist. But the word recession is not appropriate at all for us."

At the root of the recent turbulence on financial markets is the so-called "sub-prime" mortgage crisis in the United States.

In recent weeks it has emerged that American financial institutions have funded home loans to individuals with poor credit histories by selling investments to banks around the world.

These bonds were frequently given coveted AAA ratings by the three credit rating agencies usually a sign that an investment is safe.

But with defaults now rising, and US house prices falling, there is growing evidence that the holders of those bonds will lose hundreds of billions of dollars.

Ratings lessons

Mr Trichet says lessons need to be learned from the fact that the fees of the credit rating agencies are paid by the very financial institutions whose bonds they are assessing.

"The fact that conflict of interest might appear is something we must reflect upon, as is the fact that we have very few credit rating agencies at a global level. The fact that rating agencies, in a number of cases, were rating investments without the ultimate investors knowing what was behind the bonds is a problem.

"The credit rating agencies knew, but it was considered confidential information."

There also appears to be a great deal of co-ordination between the men at the top of the world's banking systems, especially in times of turbulence.

"I was talking with Ben Bernanke (of the US Federal Reserve) and Mervyn King (the Governor of the Bank of England) during this period," Mr Trichet adds.

"This goes without saying. We are in a very intimate relationship."

Staunch independence

He also defended the ECB against any suggestion that the recent turmoil strengthened the case of Nicolas Sarkozy, the French President.

He has frequently questioned the Bank's single objective of controlling inflation in the countries that use the Euro, even at the expense of economic growth.

Mr Trichet defends the ECB against French criticism of its priorities

"The financial crisis has proved how important it is that we improve confidence in being a solid anchor of stability. Everybody knows that our credibility is essential to the prosperity of Europe, to growth, and to job creation.

"And our independence, which is enshrined in the treaty, is absolutely essential to this credibility."

Any hopes that the current troubles may end any time soon though do not appear to be shared by the ECB president.

He says although the markets may be calmer for the moment, things could easily get worse.

"We have seen a distinct possibility that the ongoing deterioration of credit worthiness of borrowers in the US sub prime mortgage market could be a trigger for a more broad-based market correction."